Friday, April 4, 2014

The Three Phases Of The 787 Orderbook

The 787 is experiencing three phases of order maturity. It has just completed phase I and is part way through the second phase. where corporate cards are now on the table with defensive ordering. The Spring Offensive was tumultuous and complex with out a rational thought of only getting hands on the best Aircraft ever built. Vicious counter offensives were mouth as casualties mounted. There where exploding batteries. brakes on fire and can't catch break months going by as 787 orders mount clear up to over 850 initial orders where there weren't orders before for this type of aircraft. Kayos ensued as Boeing's battle flag flew high, and so goes the epic phase I of airplane conflagration.

3 Phases of The Boeing 787 Order Book and sales

  1. Spring Offensive
  2. Winter Defensive
  3. Resupply 

The second phase started about 6 months ago where airlines started mounting its offensive through defensive purchasing. Lessons learned in the first phase is you can't keep a good idea down or in this case a good airplane down. The idea was promulgated forward with a knock off breach from the A350's. It catered to the loyal customers and sometimes not so loyal Boeing customers, like JAL Routes needed protection by ordering more 787's, because they now have progressed out of the frying pan into the market place fire. Lease companies  like Gecas and ALC ordered forty 787-10, because they had customers who were in winter defensive mode. "A hora nunca", was the battle cry. 787-Tens for everyone who still want to win. Never mind that knock-off A350-1000. Its paltry 151 sold types don't even come close the big X bird from Boeing who has closer to 300 sales  or almost double of Airbus' 150 A350-1000 units. The winter defensive is about ordering sooner rather than later to protect your routes with really good aircraft such as the 777-9.

Resupply, Phase 3 for sales:

Boeing has not entered this phase officially, unless you count ANA's recent 14 787-9 ordered. Resupply comes on the heals of financial reports of several watched airlines. It is important for an airline to know that the 787 "Sea changehas shifted bottom lines. More resupply orders will be coming forward replacing dividends for 787's. Phases 3 is an important period as it could validate Boeing's big 787  gamble.

What has Airbus Done? A paltry attempt of reinvigorating its A330 as a cheaper knock-off of an 787-8 with its no start A330-NEO, which isn't an option for most serious players. The A350-1000 is a quick and dirty response to anything Boeing with plastic or metal wings. Bigger is not better, even when the bigger is going to be significantly smaller than Boeing's better 777-X. The leaders of said European companies and Desert like countries should take a vacation and clear its collective heads before listening to the same sales pitch one more time as it signs on the Airbus bottom lime.

A concluding observation is for a perfect ordering storm is waiting for Boeing. The factors contributing to this storm is as follows:

  • Financial numbers demonstrate a companyis in the plus from 787's
  • Financial Resources are made available
  • A definitive defensive plan for more 787 is required as routes become available.
  • Resupply and fleet expansion are the same thing. The first Born 787's (phase I) buy more follow-on 787's. 
This storm is forming for the last half of 2014 as Boeing begins to run the inventory of back ordered 787-8's decked to the "nines" going out the door at 6-4 split a month. Most of, or,  if all the factory and supply issues are retired and under permanent observation as part of quality control measures. 10 months is more than duable at Boeing has mapped a reasonable production rate. It just a matter of time before Boeing arrives to that 10 a month benchmark